WestJet Expands Internationally: Are the Costs too High?

WestJet, a popular air travel company, is reaching beyond its Canadian borders to a new Irish destination overseas. By adding only one new European destination to their travel list, WestJet is testing out their capacity for international air travel. Only using their smaller Boeing 737-700 planes, which seat 136 passengers, will allow them to experiment with longer and farther travel without incurring massive costs at first. But that will soon change if they continue to fly to far off destinations.

Through creating a SWOT Analysis of WestJet, it is apparent that international flights have the potential for improving business and bringing in new customers. However, the drastically increased costs of expansion and the high possibility of a new influx of European competition would most likely outweigh the benefits gained.

Strengths

  •   Low-cost air   travel – competitive advantage
  •   Strong brand   image and reputation in Canada
  •   Labour is   non-unionized so labour costs are lower = higher profit
  •   Reduces costs   since they only fly in Canada – less fuel, smaller planes, etc.

Weaknesses

  •   Lack of   international flights – loses a lot of potential customers who want to travel   overseas
  •   Smaller planes –   no first class and destinations have to be closer
  •   In-flight   entertainment and snacks are reduced in order to cut costs

Opportunities

  •   Opportunities to   expand internationally
  •   Alliances with   other airlines to expand their customer base and destination reach
  •   More specific   trip planning and promotional offers

Threats

  •   Increasing costs   of fuel can cause prices to rise
  •   Expanding overseas   will mean they have to compete with more well-established and experienced   international airlines

 

http://www.theglobeandmail.com/report-on-business/westjet-goes-trans-atlantic-with-new-dublin-flight/article15455464/

http://www.westjet.com/guest/en/home.shtml;jsessionid=nhp3SJypzXq2NhBlxDb1p2klDQvlQSF06K5vTjnkcxnh9QR9TQWW!827512881

Customers Outraged with Lululemon’s Offensive Comments

Outrage and anger is splashed across the news as Lululemon faces heat for discriminatory comments they have made regarding what they consider to be their ideal-looking customer. In response to remarks about the lack of quality of the clothing such as that the pants were “too sheer and easily pilled”, chairman and co-founder of Lululemon, Chip Wilson replied that “some women’s bodies just don’t actually work for [the pants]”. He described the problem as “really about the rubbing through the thighs”. Many customers were offended by these comments and felt alienated and hurt.

In the fashion industry, this was undoubtedly not the first time a company had prioritized customers who fit a certain mold or deliberately attempted to rid themselves of consumers who had a different “look” than the brand felt to be representative of them. Another past example is the remarks made by the CEO of Abercrombie and Fitch, Mike Jeffries, who openly stated he only wanted to sell to “attractive, cool people” and that some people “just don’t belong in [their] clothes”.

It is predicted that many consumers will begin to switch to other athletic brands such as Nike or Under Armour. Could these comments truly have such a negative impact upon Lululemon sales, or are they simply too solid in their brand position for an event like this to knock them down? I believe that, despite the current anger Lululemon is facing, their clothing and value proposition is too strong to be greatly damaged by this situation, and that with the correct strategy they will easily rebound.

http://www.huffingtonpost.com/2013/11/14/lululemon-alienating-customers_n_4275842.html?utm_hp_ref=canada-business&ir=Canada%20Business

Heinz Shuts Down Production in Canada

Across Canada, food production and packaging companies are shutting down.  In one significant example, H.J. Heinz Co., is closing its ketchup plant in Leamington, Ontario, among other places, causing hundreds of workers to be laid off and triggering an economic downswing in the small towns in Ontario that were built up around these factories.

In June of this year, Heinz was bought out by Warren Buffet’s Berkshire Hathaway Inc. and Brazilian hedge fund 3G Capital for $28 billion (U.S.). As a cost-cutting measure, the new owners implemented the closure of these Canadian factories and shifted more production to American companies. This is largely due to the rising costs of exports from Canada, and the ability to find cheaper labour and higher efficiency elsewhere.

While the decrease in costs boosts Heinz’s profit, the negative effects upon the small communities across Canada are devastating. The employees are “heartbroken” about the plant shutting down and their future financial situations. With few other work prospects in the area, many people are going to be contesting for the same jobs. As one woman states “we’re all going fight to serve a shake at McDonald’s”. This situation raises some ethical questions, as families are being forced to uproot their lives in order to find work again.

 

http://www.theglobeandmail.com/report-on-business/heinz-to-close-ontario-plant-cut-800-jobs/article15442338/

http://www.cbc.ca/news/canada/windsor/heinz-closes-leamington-plant-740-people-out-of-work-1.2426608